Warren Buffett's Berkshire Hathaway reported second-quarter earnings Saturday. BRKB stock rose solidly Monday, hitting a record high.
Berkshire Earnings Fall
Operating earnings rose 7% to $10.04 billion vs. a year earlier, with revenue up 21% to $92.5 billion. Insurance underwriting profit surged 74%. Insurance investment income also rose solidly. Those offset a 24% decline in the BNSF railroad's profit.
Analysts had expected Berkshire earnings to fall 8% vs. a year earlier to $3.87 a share, with revenue up nearly 6% to $80.58 billion. In Q1, Berkshire earnings grew 14% to $3.69 a share, topping views. Operating earnings rose 12.6% to $8.065 billion.
Warren Buffett has said he favors looking at operating income. That reflects total profits from the companies that Berkshire owns and runs. Those include insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing and retailing.
Net income totaled $35.91 billion vs. a $43.62 billion loss in Q2 2022. Net earnings include short-term investment gains. Share prices rose strongly in the second quarter.
Rising interest rates is bolstering investment income, with Berkshire investing heavily in short-term T-bills with yields above 5%. Warren Buffett expressed his confidence in Treasurys this past week after Fitch Ratings downgraded the U.S. sovereign credit rating to AA+ from AAA.
Warren Buffett's Berkshire Sells Stocks In Q2
Buffett's conglomerate sold a net $7.98 billion worth of stocks in Q2. In Q1, Berkshire sold a net $10.4 billion worth of stocks.
Berkshire reported an unrealized gain of nearly $26 billion in Q2, mostly on Apple stock.
Apple accounts for nearly half of Berkshire's equity portfolio. Apple stock has been a strong performer, up nearly 38% year to date. But the Dow tech titan fell 1.7% on Monday after tumbling 7.1% last week amid the market retreat and its own lackluster earnings.
Bank of America is another big holding. BAC stock and many banks struggled in the second quarter after the March banking crisis, but rebounded in July.
Warren Buffett has been bulking up on energy, continuing to add to its stake in Occidental Petroleum. In early July, after the second quarter, Berkshire Hathaway Energy agreed to buy out the Dominion Energy stake in a Maryland liquefied natural gas export project for $3.3 billion. That will give Berkshire a 75% stake.
Berkshire added slightly to Apple and BAC stock holdings in the first quarter. It will release specific Q2 stock buys and sells in a few weeks.
Berkshire Stock Buybacks Slow
Warren Buffett bought just $1.4 billion of Berkshire stock in the second quarter. In Q1, Berkshire repurchased $4.4 billion, up 57% from Q4 and the most since Q1 2021.
Berkshire Cash Hoard Swells
Berkshire Hathaway ended the second quarter with a mammoth cash hoard of $147.38 billion, up sharply from Q1's $130.62 billion and Q4's $128 billion.
Berkshire Stock
BRKB stock rose 3.6% to 362.58 on Monday, hitting a record high. Shares fell 1.1% to 349.99 on Friday. But they rose 18 cents for the week, eking out their fourth straight weekly gains. BRKB stock is slightly extended from a buy point from a 331.84 buy point decisively cleared in early June.
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